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Running a CSA can be a tricky business

by Luke Runyon, Harvest Public Media

Michael Baute and his girlfriend Meghan Williams co-own tiny Spring Kite Farms in Fort Collins, Colo. Both had farmed as apprentices before, but wanted their own space and their own business. (Photo by Luke Runyon, Harvest Public Media)

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Luke Runyon, Harvest Public Media

June 18, 2013 - 6:30am

Community Supported Agriculture operations, CSAs, are a popular way small farms sell local food. For customers, they are a way to restore a connection to the foods they eat. For farmers, running a CSA can bring with it some tricky business decisions.

Within the local food movement, the community supported agriculture model is praised. The model is simple: Consumers buy a share of a farmer’s produce up front as a shareholder and then reap the rewards at harvest time.

Farmers, some of whom have limited business experience, must quickly learn how to market products, build customer loyalty, advertise, manage risk and diversify their revenue sources. CSAs, depending on their member involvement, often force farmers to turn a portion of their operation into a customer service business.

Visit Spring Kite Farm in Fort Collins, Colo., and it’s clear even on small vegetable farms, business savvy is a necessity. Meghan Williams and her boyfriend Michael Baute began farming a three-acre parcel in the spring of 2012. Both had farmed as apprentices before, but wanted their own space and their own business.

“People ask if we’re married and we say, ‘Oh no, we’re way beyond that. We own a small organic farm together,” Baute said with a laugh. “You spend a lot of time on the farm and there’s not a great margin, profit margin, so in the beginning it’s definitely a struggle.”

Many small business owners will understand that struggle, even if running a small vegetable farm comes with what Baute called “unique challenges.” The business of Spring Kite Farm is split into thirds. One third of the produce goes to the farmers market. Another third is sold to local restaurants. The final third feeds their 35 CSA shareholders, a relatively small CSA. An operation in Europe, where the CSA model has been used for decades longer than in the U.S., feeds more than 45,000 families.

Williams and Baute say they’re trying to avoid the pitfalls of running a CSA in part by taking a slow growth approach.

Here’s how the model works at Spring Kite: Local folks sign up at the beginning of the spring and write a check to the farm for a season’s worth of vegetables. Then they hope for a good year, right alongside the young farmers.

“Like the stock market, you can have a good year or a bad year,” Williams said. “Sometimes it pays off and it doesn’t pay off in money, it pays off in food.”

Starting and running a small farm, or any small business, is inherently risky. About ten percent of farms go out of business each year.

“The CSA model is probably the deepest commitment a customer can have with a farm, but it’s also very difficult to run well,” said Dawn Thilmany, a professor of agricultural economics at Colorado State University. “It’s just a richer relationship. And any time there’s a richer relationship in any form, but mostly in business, it’s going to mean you have to do a lot of planning to make sure you can honor all of your promises.”

The promise of locally produced, consistent baskets of food is one of the biggest concerns when running a CSA. Proponents of the model say it’s what makes the CSA model unique. A CSA allows a farmer to spread out the risk of running a small farm. Customers share a portion of the risk, whether it be in the form of late season frosts, pesky bugs or hailstorms, which can really help a small farm plan for a growing season. They receive cash up front and have a stable group of investors.

The problem comes when things go wrong. Small farms can usually communicate that risk to members, Thilmany said, but it can be a tougher task for bigger farms with a less engaged group of members. One bad season could sour even the most loyal members.

“Once you have a ding on your record that someone was disappointed, it’s really hard to get your reputation back,” Thilmany said.

Another problem is the lack of reliable data on what works and what doesn’t. The U.S. Department of Agriculture is starting to take notice of innovative local food systems. The USDA recently commissioned a nationwide survey of CSA farms, working with researchers from the University of Kentucky. Forms are scheduled to be sent out this year.

Other surveys and studies conducted since the CSA model took hold in the United States in the 1980s have been fragmented, incomplete, or infrequently updated. A 2007 USDA agricultural census asked farm owners just one question about CSAs. More than 12,500 farmers said they had some involvement with a CSA enterprise. That number, though, has been called inaccurate due to the loose and sometimes confusing definition of what qualifies as a CSA. A University of Wisconsin 1999 study of farms that were using the CSA model yielded insights on how these businesses were faring financially, but there hasn’t been a comprehensive look at the state of the CSA movement in the U.S. since then.

John Hendrickson, a professor at the University of Wisconsin-Madison, and a vegetable grower himself, helped conduct the 1999 nationwide survey. When talking to CSA farmers, he found the biggest challenges came when they started to grow the farm, to begin making more money. He says problems came up not just on the customer service side, but on expanding the farm’s operations.

“It’s fairly easy to fall into a trap of growing larger than you intended even in the very first season,” Hendrickson said, noting that it can be tempting to expand quickly when the weather’s cooperating and customers are clamoring for a CSA share.

But bad weather and other unexpected complications lurk just around the bend. Plus, it’s easier to manage weeds and harvest and pack produce from a four-acre farm than from a 400-acre farm.

The biggest challenges to the growth in CSAs are financial, Hendrickson said. Back in 1999, he found on average CSA enterprises brought in $15,000 annually. Farms that used CSAs as an income source reported total farm income of somewhere between $20,000 and $30,000, which forced many small farmers to keep jobs off the farm. Even though the study is more than a decade old, Hendrickson said he suspected many of the same issues are at play on CSA farms today.

Back at Spring Kite Farms in Fort Collins, Meghan Williams and Michael Baute say they’re taking the “slow growth” approach to avoid some of the pitfalls that come when a farm grows too quickly. They just barely broke even last year, without giving themselves a paycheck.

“Part of our philosophy – and this is incredibly idealistic and romantic and I know that – but there’s more ways to quantify success than just maximizing economic gain,” Baute said. “And so for us to be out here with our dogs and make our own decisions, that’s success.”

Even Baute says joining a CSA is not for everyone, no matter how much the concept is in vogue. Shared risk can cause even the most die-hard foodie to feel anxious, and make them pine for the days of shopping at the farmers market.